Inter-organizational Networking and Innovative Clusters between Small and Medium-Sized Companies

Organizational life in the 21st century means being able to meet the challenges posed by a rapidly changing environment. The focus of organization innovation has changed from attempting flexibility through complex internal arrangements, like matrix designs, to attempting flexibility in external relations. A variety of factors, including increased cost and quality, competition in established markets, and rapid technological advances propelling product and production system innovation, is driving out the bureaucracy and hierarchy associated with traditional organizations in favor of more innovative forms. Many organizations are meeting this push for flexibility by streamlining operations and engaging in more entrepreneurial activities. The focus of this paper is on an aspect of entrepreneurial innovation, which is gaining increased recognition as a means for injecting greater flexibility into all types of multilateral cooperation between organizations and inter-organizational networking. The objectives of the paper are to describe the different approaches and selected discussions of inter-firm cooperation, to bring out possible advantages and prerequisites of successful cooperation. The main point in the modeling of SMEs cooperation is to provide guideline what are the most common forms and what are the fundamental prerequisites for successful network cooperation. The basic challenge thus is to get the small or medium-sized company to enter its first cooperative arrangement. The constant interaction between firms is crucial and is based on the development of a fair partnership. Networks, clusters and partnerships all allow SMEs to merge their strengths together and bid for bigger projects.